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Millions turn to disability benefits

Millions turn to disability benefits
By Louis Uchitelle
New York Times News Service

Millions of low-skilled workers have turned to federal disability pay as a refuge from layoffs in recent years, doubling the benefit's cost and, with little notice, making it by far the government's biggest income-support program.

Most of those qualifying for the benefits, part of the Social Security system, never got past high school and held jobs like factory worker, waitress, store clerk, laborer or health-care aide. Their numbers have grown to 5.42 million today from 3 million in 1990, swelling the program's costs to $60 billion last year.
That far surpasses unemployment insurance or food stamps or any other similar program.

"Show me a high school dropout, particularly a male, who is over the age of 40 and is not working and there is a 40 to 45 percent chance that he is on Social Security disability insurance," said David H. Autor, an economist at the Massachusetts Institute of Technology.

It is not that disabling injuries are occurring more frequently or that more people are cheating a system that requires considerable evidence to prove disability. Research by a number of economists indicates that the growing numbers signal instead a reliance on disability benefits by low-end workers who had ignored their ailments as long as their limited skills brought them steady employment. Some who would have gone on welfare now apply for disability pay instead.

"When you are a person who has lost a job, and you can't find another and you are home sitting on the couch," said Morley White, an administrative law judge in Cleveland who rules on disability claims, "you become preoccupied with ailments that do qualify in many cases as legal disability but while you were working did not come into your mind."

Neither Congress nor the White House has publicly challenged the skyrocketing cost of disability insurance, which will go up another $9 billion this year, reaching $69 billion, the Social Security Administration estimates. By comparison, Social Security expects to pay out $382 billion in traditional old age pensions in 2002, financing both pensions and disability payments through the same payroll tax. The debate on the financial health of Social Security has focused on the much larger pension system.

"There was always a bigger issue in the news to distract us and disability just crept up on us," said Kevin M. Murphy, a labor economist at the University of Chicago. "It is the tortoise in the tortoise and hare story."

The surge in the disability rolls started with the early 1990s recession, and the numbers climbed steadily as layoffs became common, even in the boom years of the late '90s. Hard times over the past 18 months produced another surge in the disability rolls, which grew by nearly 400,000 people in that period, unevenly across the country. State officials process the disability claims, acting as agents for Social Security, and some states have been more generous than others.

"In tough times, there is a tendency at the state level to cut people a little slack," said Charles A. Jeszeck, a labor economist at the General Accounting Office.

The 5.42 million people on disability pay, receiving $819 a month on average, is equal to 4 percent of those who hold jobs today. That increased from 2.5 percent in 1990 after barely rising at all in the 1980s, although Congress broadened the definition of disability and made proving it easier in 1984. It became particularly easier in the cases of back trouble and mental health problems, which can now include depression, manic behavior and other "mood disorders." Back trouble and mental stress are the two most cited ailments in disability awards.

"You have to be basically unable to function in a working environment," Autor said about the broader guidelines. "Before 1984, you had to have a specific qualifying ailment, like schizophrenia or a broken back."

Seventy-five percent of those on disability have only a high school diploma or less education, the Social Security Administration reports. Their limited skills mean they are often still without a job five months after being laid off - the minimum time required to file for disability pay. Magnifying the problem, the low skilled find themselves mostly holding jobs that require physical exertion, White said, and any ailment becomes an obstacle to landing the next job. So they turn to disability insurance.

"I think that people who are better educated with transferable skills and other opportunities do not have to come before me to claim disability," the judge added.

Sitting or standing: Those are key criteria in judging whether a claimant, particularly one with little education, can "engage in a substantial gainful activity." If the person can demonstrate that because of an ailment or the pain it produces, he or she can no longer sit for six hours in an eight-hour day or stand for at least two, then that person is deemed disabled.

"Pain is the most argued thing in disability cases," White said, adding that "98 percent of the people who come before me truly believe they are disabled."

No one disputes that the disability rolls are swelling. But the reasons offered vary. Social Security officials attribute the rise to a large number of aging baby boomers. In addition, the officials say, many more women have gone to work, thus becoming eligible for benefits. The rules require a disability applicant to have held a paid job for a total of five of the previous 10 years and to have earned wages for 25 percent of the time since age 22. The earnings in these years then become the basis for calculating disability.

Those explanations are challenged by some economists and policy makers. Despite the baby boomers, the average age of people on disability has fallen, they note. They argue that younger people increasingly qualify on the ground of mental illness. With the average age falling, the disabled are remaining on the rolls longer, and that has swelled the numbers. Congress helped in this process by making it harder for Social Security officials to declare people cured and no longer eligible for disability.

"They now have to present compelling evidence of an improvement in health," Autor, the MIT economist, said.

There are other explanations. Lawyers, for example, increasingly help applicants with their claims, earning fees if the claims are awarded.
The disability payments themselves have been rising at a faster rate than the pay of most low-end workers, gradually making paid employment less attractive for the unskilled, said Lawrence Katz, a Harvard University labor economist.

There's another lure, particularly for the unskilled who often work without company-paid health insurance. Two years after the disability checks begin to arrive, Medicare coverage kicks in free.

Cost-cutting proposals are beginning to appear. Douglas Besharov, a scholar at the conservative American Enterprise Institute, for example, would make modern drugs available at little or no cost to the mentality ill on disability so they could work again, thus cutting the rolls. But he sees little chance of change now.

"This is the wrong election cycle to talk about cutting back anything," he said. "I think the lesson of the last year is that the Democrats want to paint the Republicans as mean, and the Republicans are willing to spend tens of billions of dollars to avoid being called mean."